The U.S. Coast Guard Sector Northern New England has started reviewing the safety and security issues of liquefied natural gas (LNG) tanker traffic through Passamaquoddy Bay and its approaches to Mill Cove and Split Rock, ME, in conjunction with FERC’s permitting process for Downeast LNG’s proposed $400 million terminal and Quoddy Bay LLC’s LNG project in Maine.
The Coast Guard said it was officially notified last week by Downeast LNG of its plans to site an LNG facility in the Passamaquoddy Bay region in a letter of intent, which kicks off the Coast Guard’s review process to ensure LNG-laden tankers operate safely in U.S. waters. Just prior to that, it received notification from Oklahoma-based Quoddy Bay of its intention to build a terminal project in the bay region.
The Coast Guard will evaluate the suitability of the waterway for LNG marine traffic and provide its findings to the Federal Energy Regulatory Commission for its inclusion in the environmental impact statements (EIS) on the LNG terminal projects.
“We plan to work very closely with local officials, our Port Safety Forum and the Area Maritime Security Committee in evaluating all proposals,” said Captain Stephen Garrity of the Port Sector Northern New England. “We will also be looking for comments from the general public in the U.S. and Canada to ensure the full range of issues associated with moving LNG tankers from the Bay of Fundy to Passamaquoddy Bays are considered… The safety and security of the facility and port…remain my top priority,”
Downeast LNG and Quoddy Bay will be required to provide the Coast Guard with a safety and security assessment that identifies any navigational safety hazards as well as potential security threats, along with recommended mitigation measures and resources that will be needed to provide an acceptable level of safety and security for the proposed LNG operations, according to the Coast Guard. The assessments will become part of FERC’s EIS reviews of the LNG projects.
The proposed Downeast LNG terminal will be built on an 80-acre site on the south side of Mill Cove, where the St. Croix River meets Passamaquoddy Bay. The project’s financial backers are Kestrel Energy Partners LLC, an oil and gas private equity investment firm based in New York, and Dean Girdis, who is president and founder of Downeast LNG. Girdis, a former consultant with Washington, DC-based PFC Energy, funded preliminary project development over the last year with his own money (see Daily GPI, July 13).
Girdis said the company conducted a demand analysis and determined that there would be a 1.5-1.8 Bcf/d gas supply deficit in New England and the Maritimes provinces of Canada by 2020 if no LNG terminals are built.
Downeast LNG may face stiff competition not only from Quoddy Bay LLC, but also from Anadarko’s Bear Head LNG terminal in Point Tupper, Nova Scotia, and from Irving Oil and Repsol’s Canaport LNG terminal in St. John, New Brunswick. Operators of Anadarko’s and Irving/Repsol’s projects have already begun construction, and signed precedent agreements for a substantial amount of proposed expansion capacity on the Maritimes & Northeast Pipeline system.
Quoddy Bay LLC earlier this month requested that FERC initiate an environmental pre-filing process for its proposed LNG terminal, which would be located at Split Rock, ME, on the Sipayik reservation of the Passamaquoddy Tribe in Washington County. The 15-acre site near Pleasant Point, ME, abuts the Passamaquoddy and Cobscook Bays (see Daily GPI, Dec. 20).
A proposed pipeline would carry the LNG about one mile to a storage facility planned in the town of Perry, ME, where it would be regasified at a rate of up to 800 MMcf/d and then transported through another longer pipeline to the Maritimes & Northeast Pipeline. The company said it is seeking to begin construction in 2007 and to be in operation in 2010.
In related action, a group opposed to the construction of the Quoddy Bay project, as well as other LNG facilities in Maine, has asked FERC to suspend the pre-filing review process for Quoddy Bay’s proposed terminal until the courts can decide if the company has lawful access to the Split Rock site.
Last month, eight leaders of the Passamaquoddy Tribe filed a lawsuit in U.S. District Court in Bangor against the Interior Department’s Bureau of Indian Affairs (BIA), challenging the BIA’s approval of the tribe’s lease agreement with Quoddy Bay for the Split Rock site.
“Since the lease agreement between [the]…Passamaquoddy Reservation and Quoddy Bay LLC may be determined by the court to be invalid, access to the site is not free and clear. It is possible that free access to the required site may never become available to Quoddy Bay LLC,” the Save Passamaquoddy Bay 3-Nation Alliance, a group of Passamaquoddy tribal, U.S. and Canadian members, said in a letter to FERC [PF06-11].
“It is inappropriate for the FERC and U.S. Coast Guard to expend taxpayer-funded time and expenses on a project that may have no validity in fact. I request that the FERC reject the applicant’s pre-filing until such time that they have unencumbered access to the Split Rock site, and that the Coast Guard also reject the request for waterway assessment related to that project,” said Robert Godfrey of the group.
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